Special Bulletin: January 08, 2020

…And the Highs just keep on comin’!

First, a personal note. After hearing the reports of the Iranian missile strikes on US bases last night and learning this morning there were no casualties (thank You God!) and only minimal damage, my mind kept repeating this familiar verse all day, “…and the rocket’s red glare, the bombs bursting in air, gave proof through the night that our flag was still there.” I can only imagine what it was like last night for our brave Service men and women on those bases in Iraq. How timeless are those great words penned by Francis Scott Key nearly 206 years ago! (At the end of this bulletin is a verse of our National Anthem that may surprise you.)

Those words took on a special meaning as Americans for our team today. All of us at TPM want to personally thank our nations soldiers for their courage and sacrifice for our country, our freedoms, and for “Old Glory.” Thank you for living out our National Anthem right in front of our eyes. We salute you!

Definition of a bull market: When stocks go up even after missiles come down. Yesterday, Iran launched several missiles targeted at US bases in Iraq. Today, the stock market soared after President Trump acted very Presidential. While Iran may have stood down, US equities did not. At least not yet.

The stock market continues to exhibit strength (and with a kindly meant apology to Michael Nesmith) …and the “Highs” just keep on comin’! This bull market is not monkeying around. In fact, it’s acting more like a gorilla. I wonder if even King Kong would be envious of its strength.

It is hard to argue with a market that just wants to go up. Caution is warranted, however, as bullish investor sentiment continues to reflect high levels of complacency. As this has been going on for several weeks, it is suggesting a pullback is now closer. The long-term technical condition of the stock market is still sound, but one of our “Core 4” internal indicators is red. The other three are green. This current technical condition keeps our signal “on the bubble” with an effective weighting of 2 green and 2 yellow. Our Current Market Outlook remains “Market in an Uptrend” with a “green” light. We are delighted with the results of our “math of the market” mathematical process of tracking the foot prints of money, as our proprietary market signal system went “Green” on October 15th at the height of the impeachment news and the fear of an unwinding China trade deal, and has stayed there ever since.

If investors were waiting for the new year to take some profits, as many commentators were suggesting in December, they have been greeted by eager buyers who have stepped-in during each bout of selling on the Iranian news. A market that starts sharply lower but finishes the day up is a strong market. When the market does finally correct, expect the S&P500 to ultimately slide back to its 50 day mav and test it for institutional buying support.

What can investors do now? Take partial or even full profits on holdings that have advanced 20% or more quickly. Prepare a “buy the dip” watch list of superior stocks that are extended in price. Watch for a test of the 21 day moving averages first by the major indexes and leading stocks once a corrective phase begins. If it holds, great! If it fails, then expect an expansion of the pullback to the 50 day mav. Note: We do NOT see technical evidence for a severe correction yet. The bulls are enjoying the move and are finally beginning to sing “I’m a believer.” That is why optimism is so high.

As promised, here is the last verse of the Star-Spangled Banner (our National Anthem).

“Oh, thus be it ever, when freemen shall stand
Between their loved home and the war’s desolation!
Blest with victory and peace, may the heav’n-rescued land
praise the Power that hath made and preserved us a nation!
Then conquer we must, when our cause it is just,
And this be our motto: “In God is our trust”:
And the star-spangled banner in triumph shall wave
O’er the land of the free and the home of the brave.”

Happy New Year and have a Triumphant day! ®